Making sense of the markets this week: April 26, 2021


“Revenue was up 3% on the year to $43.9B and the $0.86 EPS beat estimates by $0.08.

“Group sales were up 3% to $43.9B, topping the $42.4B consensus estimate.

“HBO Max gained 2.7M U.S. subscribing, bringing the total up to 44.2M. Worldwide subscribers totaled 64M.”

AT&T leads to another interesting stock story for the week: The “disappointing” results for stock market darling Netflix. You know, Netflix from the famed FAANG gang of Facebook, Apple, Amazon, Netflix and Google. 

Netflix beat on revenue expectations, with an incredible 24% increase year over year. That might not be surprising, though, given the the stay-at-home and watch-movies-at-home reality of the pandemic. That said, the new subscriber growth of 3.98 million was short of expectations. Netflix then guided that they expect “only” 1 million new subscribers for the second quarter of 2021. 

The stock was hit hard upon earnings release, down by over 10% on Tuesday. 

But the trend continues and, as at-home streaming continues to displace traditional TV,  that trend may perhaps become lasting and permanent. And while we crave experiences, heading off to crowded movie theatres might not be top of the list for things to do on the other side of the pandemic. 

In the defensive consumer staple stock category, Procter & Gamble delivered another very solid quarter, beating on revenue and earnings. Revenue was up 5.25% year over year. While these boring types of stocks may not do much when the stock markets are roaring, we might be glad to hold them if or when we move into periods of prolonged recessions. In that boring category, I hold Colgate-Palmolive, Walmart and Pepsi. Other names in the index of boring but solid are KImberly-Clark, Costco, Coca-Cola, General Mills and Kraft-Heinz. These types of stocks and the sector can hold up well in economically challenging times, given that their products are essential. They can underperform for extended periods, but we should remember why we hold them as more “risk off” stocks. 



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